In 2007, the latest year for which figures are available, TANF spending on cash assistance (not including child care or other subsidies) came to $4.5 billion. Total commitments to TARP since September 2008 come to $700 billion. So one year of TANF spending equals less than 1 percent of TARP. Citibank alone received $25 billion, five times the cash transferred to mothers and children receiving public assistance in 2007.

Here’s a more specific comparison. Top executives of banks bailed out this year — about 600 guys — received an estimated $1.6 billion in bonuses in 2007. That’s a little over a third of what 1.6 million families got in cash from TANF in that year.

TANF isn’t the only form of assistance to the poor that we regularly provide and TARP isn’t the only form of assistance to banks and insurance companies delivered this year. It’s difficult to figure out exactly what should be added up on both sides to compare welfare to rich and poor.

Robert Rector and Katharine Bradley of the Heritage Foundation, a conservative research organization, estimate that federal welfare spending amounted to $491 billion in fiscal 2008. (They don’t explain what specific programs they included in this estimate, and I’ll try to unpack it in a future post.) Even their extremely high estimate remains far below estimates of the total of $2.5 trillion spent on financial bailouts this year. The libertarian Cato Institute often emphasizes the issue of corporate welfare, but it’s remained remarkably quiet so far on the topic of bailouts.

The Welfare Indicators Act of 1994 requires annual reports to Congress on the level of welfare dependence. Perhaps we should require similar reports for banks and insurance companies.

In the wake of an earlier round of bank bailouts presided over by George H.W. Bush, I published a short piece in Newsweek entitled “Welfare Bankers” (sadly, the magazine’s digital archives do not extend to October 16-17, 1989). Protesting the moral double standard applied to bankers and to welfare mothers, I argued that the bankers whose institutions were bailed out at a cost of about $156 billion (what a deal compared to today’s bailout!) could perhaps be retrained as child care workers.

In the decade that followed this financial debacle, we could have gotten banking reform. Instead, we got welfare reform. Stricter work requirements and time limits were imposed. The welfare rolls declined sharply. Participation in the TANF program has fallen by half since 1996.

Welfare reform was heralded as a great success because it got so many of our female “troubled assets” off the rolls. But in addition to some unanticipated side effects (which I’ll describe in a future post), it was premised on the assumption that single mothers would be able to find work if they just tried hard enough.

That assumption no longer holds. More than one out of 10 single mothers is out of work. The latest figures from the Bureau of Labor Statistics report an unemployment rate for March of 10.8 percent for women who maintain families on their own, significantly higher than the average seasonally adjusted unemployment rate for men (9.5 percent) or women (7.5 percent) the same month. Unemployed single mothers number about a million, compared with two million unemployed married women.

The recent stimulus package passed by Congress offers some supplementary funds to the states for public assistance. Conservative groups such as the Heritage Foundation lambasted the stimulus package for “abolishing welfare reform.” That, it does not do. But if unemployment rates for single mothers remain over 10 percent, welfare reform may indeed need to be reformed.

For the record, SSI is also a “direct cash assistance program”, albeit for individuals under age 65 with a disability or age 65 and over without one. Part of the reduction in TANF is the result of a move by states to transfer recipients to SSI, which generally has a positive effect on family income. However, this may not be what is driving trends for single mothers.

Good point about SSI–I should have specified cash assistance targeted to single mothers. True, single mothers qualify for SSI if they are blind or disabled but the increase in SSI doesn’t come close to making up for the decline in take-up rates or benefit levels under TANF.

Is it possible that the problem is that those in power only react when forced? The bankers threaten to leave the world in ashes unless they get the baksheesh they have so obviously ‘earned’, those who are in actual need muddle through or suffer in silence.

Well, it’s not just 2 letters. TARP is an exchange transaction in which the government received back claims and stakes in the companies “bailed out”, in addition to the second-order effect on the general welfare, but TANF is solely transfer payments for which the only benefit to the public is the latter. Neither of the general welfare effects is easily ascertained, although one can have a preference for one over the other reasons beyond quantitative proof. Because the claims and stakes in TARP have not been fully monetized and resolved, you can’t compare the two yet. The exchange transacctions in TARP could net to zero or even a positive sum which would moot this post.

EITC isn’t considered a “direct cash assistance program”? I thought if one qualified in the prior year, it was theoretically possible to get a negative-withholding from your employer though I can’t claim to know how feasible this is in practice. Wikipedia says EITC delivered $36B to 21 million recipients in 2004. That makes EITC a much larger program than TANF as described here, though still a drop compared to TARP.

Are your policies helping? Not the average person trying to work in America.

The bank giveaway is obscene! Yes, you are helping hedge funds and wealthy investors.

Have any of your or the Federal Reserve’s actions hurt us, in working America? Yes, all of them! Remind us why the banks are provided creative accounting to ‘pretend’ they are solvent with ‘mark-to-market’ accounting tricks and 0% interest by the FED and EXPLAIN TO US Why average Americans are not allowed to manipulate their bank accounts and home values or loans to correctly reflect the markets so we can ‘pretend’ also. HAVE YOU FORGOTTEN THAT THE TROUBLE STARTED WHEN YOU MAXED OUT THE BUYING POWER OF AMERICANS? THIS IS JUST MORE OF THE SAME POLICY!

EXPLAIN TO US HOW banks and hedge funds being allowed to operate today still unregulated and without oversight, by REAL ENFORCEMENT backed by the Justice Department, have any value to average Americans?

WE WANT TO KNOW why everyone you have put into these positions is from the very companies they are supposed to watch? How is that any different from Bush? Why are their no prosecutions from Justice in the SEC

It could be argued that TANF recipients do pay a portion of that money back to the federal and state government in the form of sales taxes. And if some of it does happen to go to landlords, then even they would presumably spend some of it on taxes too.

I’m a regular reader of the Cato Institute’s blog (that’s how I ended up reading this post), and I can tell you with some certainty that they have been speaking out consistently (and loudly, though clearly not loudly enough) against the trillion dollar bank bailouts.

Regarding Prof. Folbre’s assertion “The libertarian Cato Institute often emphasizes the issue of corporate welfare, but it’s remained remarkably quiet so far on the topic of bailouts. ” Let the record show that pasting the word in the Cato search function will produce some 300 immediate results including this just published:

To Bail or Not To Bail, That Is the Question
This present crisis has demonstrated that undertaking bailouts of troubled institutions is a process for which government is ill-suited. In a new study, authors Vern McKinley and Gary Gegenheimer arugue, “These bailout powers should be revoked….The ultimate answer is to place troubled institutions into receivership or the relevant form of bankruptcy — including many of the institutions that have already been bailed out.

I call shenanigans!! CATO has been excruciatingly outspoken against the bailouts. Some one is not being honest in at least one arena (possibly more) of assesment. Please do some research next time. Thank you.

FYI…the data on “women maintaining families” include women who maintain families with no children present. I think about 40 percent of families maintained by women have no children present. These families are made up of other family members like siblings or parents, for example. and the woman is the head of the household.

You’re right. The Cato Institute website has not been silent. It just didn’t meet my expectations of adequate noise. The study that Ashley cites, “To Bail or not to Bail,” was posted after my own post was submitted. While many individual scholars affiliated with Cato have published opinion pieces and short reports opposing government intervention in banking, I had hoped to find more in-depth critiques of bailouts as corporate welfare. In my opinion, more research is needed both on the cultural assumptions and the political connections that continue to shape the bank bailout.

I admire the Cato Institute’s willingness to challenge the corporate establishment.

This is a good article, and sheds some light, but we need to be carefull to compare apples to apples.

TANF does not LOAN needy families money, it GIVES families money. It doesn’t CONTROL families the way TARP puts many restrictions on banks.

Banks are paying a 5% yearly premium to borrow the funds. When banks pay back the government (as many banks are trying to do) they have to pay down the principal and huge fee of up to 30%. If the economy recovered and all banks paid back the cash, the government would have made over billions in sheer profit. Of course we know that won’t happen.

Needless to say, this bailout has been politically unpopular, and we certainly need to increase our social welfare programs while still encouraging accountability of those who receive it.

“It could be argued that TANF recipients do pay a portion of that money back to the federal and state government in the form of sales taxes. And if some of it does happen to go to landlords, then even they would presumably spend some of it on taxes too.”

From a statistical standpoint, I don’t like doing this adjustment.

Does Education cost as 1 billion, or 1 billion – the taxes that teachers, adminstators, and contractors pay?

Do we spend 550 billion in defense, or 550 billion minus all the corporate and individual income taxes that people who work in defese pay?

Every single dollar the fund spends, generates jobs which are taxed. I think you would only mention this if you wanted to make something apples to apples, and one entity (say the banks) were taxed more heavily or less heavily compared to another entity (say people who receive TANF).

Perhaps a correction regarding the statement about Cato would be in order? I know it’s hard to keep track of your own opinion (it being ill-founded), but Cato’s opinion on most matters can easily be ascertained by simply visiting their website (also it tends to remain quite consistent ).

The Affordable Care Act imposes economic burdens that are the equivalent of taxes, an economist writes. Read more…

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